European stock markets started Tuesday’s session with a mixed and somewhat cautious tone, as investors kept a close watch on ongoing trade talks between the United States and China in London.
While major indices showed slight variations, a notable feature was the broad decline in European defense stocks, potentially linked to the discussions around critical mineral exports.
Meanwhile, fresh UK labor market data provided new insights into the country’s economic health.
Approximately ten minutes after the opening bell, the pan-European Stoxx 600 index was trading flat, indicating a general lack of strong directional conviction across the continent.
Looking at individual national markets, London’s FTSE 100 was up by a respectable 0.4%. In contrast, Germany’s DAX index was down by 0.2%, and France’s CAC 40 was last seen marginally higher.
A significant area of weakness this morning was the European defense sector. The regional Stoxx Aerospace and Defense index extended its recent losses, trading 0.8% lower.
This puts the index on track for its third consecutive day of declines. This downturn comes as investors monitor the US-China trade talks, which are set to continue in London on Tuesday.
A central point of these discussions revolves around critical minerals, on which China imposed export restrictions in April in response to US tariffs on Chinese exports.
These rare earth minerals are vital for the production of weaponry and other advanced defense technologies, making any developments in their trade a key concern for the sector.
Illustrating this pressure, shares in German defense giant Rheinmetall were last seen trading 3.4% lower.
Other German defense-related companies, Renk and Hensoldt, experienced even sharper falls, down 8% and 3.1%, respectively.
Currency and UK labor market: pound slips, job openings fall, wage growth cools
In currency markets, the British pound was down 0.5% against the US dollar on Tuesday morning, trading at around $1.35.
Despite this dip, sterling has still gained a notable 7.8% against the greenback so far this year.
New data from the UK’s Office for National Statistics (ONS) this morning provided a detailed snapshot of the labor market.
Job vacancies in the UK fell to 736,000 between March and May, a decline of 63,000 openings, or 7.9%, from the previous three-month period.
This marked the 35th consecutive decline in job openings, signaling a continued cooling in hiring demand.
Meanwhile, average earnings, including bonuses, saw a year-on-year increase of 5.3% for the period between February and April.
This indicates that while wage growth remains, it has steadily cooled since spiking to 6.1% in December.
Britain’s unemployment rate rose slightly to 4.6% in the three months to April, a figure that was in line with economist expectations.
In the previous three-month window to March, UK unemployment had stood at 4.5%.
The ONS data also showed that the UK’s economic inactivity rate—an estimate of those aged 16 to 64 who are out of work and either not seeking employment or unable to start work imminently—rose to 21.3% in the three months to April.
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